Jonathan Marx
President
ISP Channel, Inc.

Dear Jonathan:

This letter  represents  an update to, and replaces the letter  signed by you on
October 6, 2000.  First,  the plan in that letter has been approved by the Board
of Directors of SoftNet Systems Inc., and will be paid to you by SoftNet Systems
Inc.  Second,  we have  determined  that ISP Channel will not be sold, so we are
eliminating  that portion of the Incentive  Retention  Bonus.  Finally,  we have
determined  the  definition of  "economically  successful  conclusion"  and will
outline that here.

In light of the current events  surrounding the future of ISP Channel,  Inc., we
have developed an enhanced retention bonus program. We expect the ISP Channel to
be  closed,  with a  target  date of  January  31,  2001.  The date may be later
depending on final  arrangements.  During this transition period, it is critical
that we continue to service our existing  customers  and operate the ISP Channel
consistent  with  the  dual  goal  of  economically  successful  conclusion  and
developing  agreements with our cable operators and vendors.  For that reason we
are putting in place a Retention  Bonus Program for you. The Retention  Bonus is
additional  pay,  equal  to a  minimum  of  $105,000.  You are  eligible  for an
additional  Incentive  Retention  Bonus  of  up to  $535,000,  based  upon  your
performance  and  participation  in  accomplishing  an  economically  successful
conclusion.  This Retention Bonus and Incentive  Retention Bonus will be paid to
you 30 days after the  completion  of closing of the  company  but no later than
February 28, 2001, providing you do not voluntarily resign or are terminated for
cause.

"Economically  successful conclusion" has been defined as the cash flow required
to run and close ISP Channel  beginning  October 1, 2000,  the  beginning of our
fiscal year.  That amount must not exceed  $30,000,000  in Cash Flow.  Cash flow
shall be defined as a) the  traditional  P&L and Capital  items  reported by ISP
Channel,  including Revenue less Operating Expenses,  less Capital Spending, and
b) less the disposition of ISP Channel's Balance Sheet.

Disposition  of ISP  Channel's  Balance Sheet shall be defined using the Balance
Sheet for the ISP Channel as  presented  on 11/7/00.  It showed  Assets of $81.9
million and  Liabilities  of $28.1  million.  These  assets must be written off,
transferred or sold. The liabilities  must be reduced,  reassigned to SoftNet or
paid.

The  11/7/00  Estimate of Cash Flow for the ISP Channel  includes  $9.8  million
losses in  operations  that we developed  together as a budget,  $8.3 million we
proposed and approved for retention and severance of employees, $26.7 million in
liabilities  to be paid off, and potential  incoming cash from sale of assets of
$20.6 million,  totaling a potential  negative Cash Flow of $24.1  million.  All
these  numbers  are at risk.  You are being  incented to assure that ISP Channel
does not spend more than $30 million in negative Cash Flow.

As  always  there  are  conditions  and   limitations.   First,   any  financial
arrangements for collection of cash or spending of cash beyond January 31, 2001,
will be present  valued to January 31, so that we account fully for the close of
ISP Channel.  This valuing will include a  discounting  for time and risk. It is
therefore best for all of us to conclude cash  collections  and payments as much
as possible  before  January  31, so that  future  Cash Flow is not  discounted.
Second, we will not include the financial effects of the $4.5 million settlement
with Mediacom,  as that is a SoftNet Senior Management decision.  Third, we will
get credit for all equipment and fixtures  sold or leased to third  parties,  or
transferred  at Book Value to SoftNet or one of its divisions.  Fourth,  we know
that  accountants are examining the ISP Channel and SoftNet Balance Sheets,  and
some of the assets and/or  liabilities  will be reassigned  among  Divisions and
Corporate,  and that we at ISP Channel are  responsible  for the  disposition of
current and changed assets and liabilities.  Finally, ISP Channel is responsible
for the outcome of all other  eventualities  in  determining  whether we hit our
financial  target of less than $30 million  negative  Cash Flow.  This  includes
telephony termination charges,  other lawsuits, and all other items. These other
eventualities are the responsibility of our management team to manage.

Your incentive is defined as follows. If ISP Channel Cash Flow is $30 million or
more,  you get your  Incentive  Retention  Bonus  minimum of  $105,000 as stated
above.  If ISP Channel  Cash Flow is $30  million or below,  you get 40% of your
Incentive Retention Bonus of $535,000. For every $500,000 in Cash Flow below $30
million,  measured to the nearest $500,000,  you will receive $26,750.  You will
earn your 100% Incentive  Retention Bonus if ISP Channel achieves  negative Cash
Flow of only $24 million.  Your Incentive  Retention Bonus will continue to grow
at $26,750 for every $500,000 below $24 million. We want to incent you to reduce
negative  Cash Flow as much as  possible,  with a  significant  portion  of your
incentive at $30 million.

To provide for an orderly transition and for your financial protection,  we have
also put in place a Special  Severance  Benefit.  This benefit is in addition to
the Retention  Bonus and is equal to  twenty-four  (24) months of your base pay.
You will be eligible for this benefit for any of the following reasons:

     |_|  Your  position is  eliminated  as a result of the sale or close of the
          company and are not offered  employment at SoftNet  Systems,  Inc., or
          the acquiring  company.

     |_|  You are offered a comparable position at SoftNet Systems Inc or any of
          its subsidiaries and are still employed after 6 months.

     |_|  You are offered a comparable  position with the acquiring  company and
          are still employed after 6 months.  Severance Benefits will be paid to
          you within two weeks of your  termination as a result of your position
          being  eliminated  as stated in #1 above,  or by June 30,  2001 if you
          accept  employment  with either the acquiring  company or with SoftNet
          Systems Inc. or any of it's subsidiaries.

This  letter  does not alter any other  terms of your  employment  with  SoftNet
Systems, Inc., including your "at will" status.


Sincerely


Garrett Girvan
Chairman & CEO




I understand, agree and accept the above,

_______________________________________     Date  _______________
Jonathan Marx